Data Snack: SMBs are growing increasingly resilient against macro headwinds
- SMBs are confident they can successfully get through another period of economic difficulty despite inflation and supply chain issues, a new survey by Kabbage shows.
- Having experienced the pandemic, SMBs feel better prepared to successfully navigate another period of economic turbulence.
The US small and medium sized business sector is showing no signs of slowing – even with inflation, supply chain issues and a potential recession looming, SMBs are confident they can successfully get through another period of economic difficulty, according to a new Kabbage survey.
The small and medium sized business sector has grown significantly in the US over the past few years. In 2021, 5.4 million new small businesses entered the market, marking a 53% increase from pre-pandemic levels, according to census data. And just in the first quarter of this year, nearly 1.3 million applications were filed.
This shows that more people are reconsidering their careers and finally taking the leap to own and run their own businesses, according to Brett Sussman, CMO at Kabbage.
The stressful times small businesses experienced during the pandemic came with a silver lining – a third of SMBs surveyed now feel better prepared to successfully navigate another period of economic turbulence.
The vast majority (83%) of SMBs polled in the survey said they were concerned about an upcoming US recession. But despite the uncertainty, 80% of businesses were confident they could withstand such an economic downturn.
Source: US Census
Even though there are macroeconomic headwinds such as inflation and labor shortages impacting them, small businesses can be quick to change in order to stay competitive, Sussman said.
“Small businesses are traditionally optimistic through difficult times because they’re comfortable making the necessary modifications to persevere,” added Gina Taylor Cotter, executive vice president & general manager of the U.S. Small Business Banking at Kabbage.
The rising number of fintechs looking to help SMBs manage their finances has also been a positive influence on the sector by giving them the tools they need to run their businesses, Sussman told Tearsheet.
“Small business owners don’t start their company to spend hours upon hours a week managing their cash flow. This is a challenge we aim to solve as businesses are telling us they’re seeking an integrated suite of products that can help them simplify their cash flow management,” he said.
Around half of businesses reported trying out new competitive strategies compared to pre-pandemic times. Almost 60% of medium and large businesses and 30% of small businesses are prioritizing branding as a primary differentiator. There’s also a significant push towards marketing and ecommerce among small businesses.
Monthly online sales represented around 40% of revenue on average, down from the 57% recorded in the March 2021 Small Business Recovery Report. The healthcare sector emerged at the top in terms of online sales growth, while hospitality recorded a drop.